First Republic Bank is considering a sale, among other things. Dania Maxwell/Los Angeles Times via Getty Images
First Republic Bank, the San Francisco-based lender that was trashed Wednesday by S&P Global Ratings and Fitch Ratings, is exploring strategic options, including a sale, according to knowledgeable people.
The bank, which is also considering options to bolster liquidity, is expected to receive interest from larger rivals, some people said, all asking for anonymity when discussing confidential information. No decision has been made yet and the bank can still choose to remain independent, they said. A spokesman for First Republic Bank declined to comment.
First Republic said on Sunday it had more than $70 billion in unused liquidity to fund operations of agreements with the Federal Reserve and JPMorgan Chase & Co. Still, the stock fell 21% in New York trading on Wednesday to a ten-year low of $31.16, giving it a market value of $5.8 billion.
“The Federal Reserve’s additional borrowing capacity, continued access to funding through the Federal Home Loan Bank, and the ability to access additional funding through JPMorgan Chase & Co. further augment, diversify and strengthen First Republic’s existing liquidity profile,” said the bank. in Sunday’s statement.
The lender specializes in private banking and wealth management and has made efforts to differentiate itself from Silicon Valley Bank, which has been seized by US regulators. Unlike SVB, which counted startups and venture companies among its largest clients, First Republic said no industry accounts for more than 9% of total corporate deposits.
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